U.S. jobs growth lifts Wall Street, offsetting tariffs
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[July 07, 2018]
By April Joyner
NEW YORK (Reuters) - U.S. stocks climbed on
Friday, with the S&P 500 and the Nasdaq hitting their highest levels in
two weeks, as strong U.S. jobs growth blunted the impact of an
escalating U.S.-China trade dispute.
Nonfarm payrolls increased by 213,000 jobs last month, the U.S. Labor
Department said, topping expectations of 195,000, while the unemployment
rate rose from an 18-year low to 4 percent and average hourly earnings
rose 0.2 percent. The moderate wage growth allayed fears of a strong
buildup in inflation pressures and boosted optimism that the Federal
Reserve would stay on a path of gradual interest rate increases.
"This really is the best outcome we could have hoped for, more jobs
without a whole lot of wage pressures," said Kim Forrest, senior
portfolio manager at Fort Pitt Capital Group in Pittsburgh.
The positive news from the U.S. employment report offset, at least for
the moment, heightened trade tensions between the United States and
China. The two countries slapped tit-for-tat tariffs on $34 billion
worth of each other's imports on Friday. Beijing accused the White House
of triggering the "largest-scale trade war."
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Some investors were encouraged that the value of goods targeted for
tariffs so far is smaller than amounts mentioned in previous threats.
U.S. President Donald Trump has warned that the United States may
ultimately target over $500 billion worth of Chinese goods, an amount
that roughly matches its total imports from China last year.
"Even though there is an ongoing trade spat, it's going to be measured,
not $500 billion all at once," said Jamie Cox, managing partner at
Harris Financial Group in Richmond, Virginia. "It gives the opportunity
for negotiations to happen and doesn't torpedo the economy, which is
what people were concerned about."
The Dow Jones Industrial Average rose 99.74 points, or 0.41 percent, to
24,456.48, the S&P 500 gained 23.21 points, or 0.85 percent, to 2,759.82
and the Nasdaq Composite added 101.96 points, or 1.34 percent, to
7,688.39.
All of the 11 major S&P 500 sectors posted gains.
For the week, the Dow increased 0.7 percent, the S&P 500 rose 1.5
percent, and the Nasdaq gained 2.4 percent.
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Traders work on the floor of the New York Stock Exchange (NYSE) in
New York, U.S., July 6, 2018. REUTERS/Brendan McDermid
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Although U.S. stocks appeared minimally affected by American and Chinese tariffs
going into effect, some investors warned that prolonged trade tensions could
roil the markets, as they have on several occasions this year.
"You're going to get some stalling of the market, should trade issues begin to
accelerate," said Gerry Sparrow, a portfolio manager for Interactive Brokers
Asset Management, a Boston-based online investing company.
Shares of Biogen Inc rose 19.6 percent, their biggest percentage gain in more
than a decade, after the company and Japanese drugmaker Eisai Co said their
Alzheimer's drug showed promise in a mid-stage trial. Biogen led the S&P 500 in
percentage gains and was among the biggest boosts to the index.
The S&P 500 healthcare index rose 1.5 percent, the greatest percentage gain
among the S&P's major sectors, while the Nasdaq biotech index jumped 3.7
percent.
Besides Biogen, technology heavyweights Apple Inc, Microsoft Corp and Facebook
Inc provided the biggest boosts to the S&P 500. The S&P technology index rose
1.2 percent.
Advancing issues outnumbered declining ones on the NYSE by a 2.99-to-1 ratio; on
Nasdaq, a 2.32-to-1 ratio favored advancers.
The S&P 500 posted 22 new 52-week highs and two new lows; the Nasdaq Composite
recorded 125 new highs and 17 new lows.
Volume on U.S. exchanges was 5.30 billion shares, compared with the 6.98 billion
average over the last 20 trading days.
(Reporting by April Joyner; additional reporting by Sruthi Shankar and Savio
D'Souza in Bengaluru; editing by Arun Koyyur, Chizu Nomiyama and Jonathan Oatis)
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